On October 7, 1994, Dane County, Wisconsin Municipal Employes Local 60,
AFSCME,
AFL-CIO filed two complaints of prohibited practice with the Wisconsin Employment
Relations
Commission alleging that the City of Madison had violated Secs. 111.70(3)(a) 1 and 4, Wis.
Stats.
On December 15, 1994, the Commission consolidated the two complaints for purpose of
hearing,
and appointed a member of its staff, Hearing Examiner David E. Shaw, to make and issue
Findings of Fact, Conclusions of Law and Order in the matter, as provided for in Sec.
111.70(4)(1) and 111.07, Wis. Stats. Hearing in the matter was held in Madison,
Wisconsin, on
February 16, 1995; a stenographic transcript of the hearing was provided to the parties by
March
8, 1995. The parties filed written arguments by April 27, 1995 and reply briefs by May 16,
1995.

2. The City of Madison, "the City," is a municipal employer with offices at 210
Martin Luther King, Jr., Boulevard, Madison, Wisconsin.

3. Among its other entities, the City operates and maintains a public library
system,
whose workforce includes collective bargaining units of librarians and paraprofessionals
represented by the Union, certified by the Wisconsin Employment Relations Commission on
October 20, 1982 and September 28, 1981, respectively. The most recent collective
bargaining
agreement for each unit covered the period January 1, 1992 to December 31, 1993; neither
unit
had an agreement covering the period after December 31, 1993 in place prior to the close of
the
record in this proceeding.

The terms and conditions of this Agreement
shall supersede Ordinances and Resolutions
wherein there is a conflict with the terms of this Agreement. This Agreement shall be
adopted
by Resolution and City Ordinance.

Section 1.04 in the Agreement covering the professional unit provided:

1.04 Conflicting Ordinances and Resolutions:
The terms and conditions of this
Agreement which shall be adopted by Ordinance and Resolution, shall supersede
ordinances and resolutions wherein there is a conflict with the terms of this
Agreement.

Section 16.02 of the paraprofessional unit Agreement, and Section 17.03 of the
professional unit
Agreement, provided the following:

Existing Benefits

The Employer intends to continue other authorized existing
employee benefits not specifically
referred to or modified in this Agreement. It is agreed by the Union that bad or
unreasonable
habits that may develop among employees do not constitute "past practice" rights or
employee
benefits. The existing employee benefits referred to in this section are those that are
mandatory
subjects of bargaining primarily related to wages, hours and other conditions of employment.

Section 17.03 of the professional unit Agreement also includes this final sentence:

. . .Disputes between the parties as to whether or not a benefit is
a mandatory subject of
bargaining primarily related to wages, hours and other conditions of employment shall be
resolved
by the WERC.

The rights and responsibilities of the Employer shall include but
are not limited to the
following subject to this Agreement:

. . .

E. To establish policies, rules,
regulations and procedures. Any dispute with respect
to policies, rules, regulations and procedures shall not in any way be subject to
arbitration unless and until said matters are applied or an employee is disciplined
pursuant to established policies, rules, regulations and procedures in which case the
reasonableness of said matters may be subject to the grievance and arbitration
procedure;

. . .

The rights and authority which the Employer has not officially
abridged, delegated or
modified by this Agreement are retained by the Employer.

The enumeration of the rights and duties of the Employer in this
Agreement shall not be
deemed to exclude other inherent management rights and management functions not expressly
reserved herein.

6. Each unit's expired collective bargaining agreement contained an Article
entitled,
"Grievance and Arbitration Procedure," identical in relevant parts, which provided for the
processing of grievances from filing through final and binding arbitration.

7. For at least the past 26 years, a practice existed under which Library employes
were
allowed to purchase books and other materials for their personal use from library suppliers,
or
"jobbers", at a discount the suppliers made available only to the Library employes. The
discount
varied from five percent to forty-three percent off the normal sale price. In making their
purchases, the librarians and paraprofessionals submitted orders under an account maintained
through the Staff Association, which consists of all employes, both represented and
unrepresented,
of the Madison Public Library, Dane County Library System and the South Central Library
System. The number of orders placed were generally ten per month, but increased to twenty
to
thirty per month near Christmas. The books/materials ordered by employes were shipped
separately from that ordered for the Library itself, but the invoices identified the Madison
Public
Library, Order Dept. - SCLS Acct. as the account to be billed. When material arrived from
the
supplier, employes were notified by library staff, and they retrieved the material from the
Library's Administrative Office, at which time they paid the amount due to a library
employe,
who then sent the invoice and money to the Staff Association, which paid the supplier.
Library
employes who purchased books and other material in this way did not pay a sales tax on their
purchases. Only library staff, and neither members of the general public nor other city
employes,
were able to participate in this program.

8. On July 26, 1993, Union Staff Representative Jack Bernfeld wrote to City
Labor
Relations Manager Gary Lebowich as follows:

I understand that the City is contemplating revising its Code of
Ethics. Please be advised that
the Union objects to the unilateral implementation of revisions to the existing Code, to the
extent
that such rules relate to any employee represented by Local 60. Such matters are mandatory
subjects of bargaining and we therefore request to bargain over the decision and impact of all
such
subjects, not otherwise covered under our collective bargaining agreement, if the City intends
to
pursue any changes affecting our membership.

The City did not respond to Bernfeld's letter.

9. Prior to August 14, 1994, Madison General Ordinance 3.47(5)(c), the City of
Madison Code of Ethics, applicable to all City employes, provided that

No official or employee shall accept any valuable gift, whether in
the form of service, loan,
thing, or promise, from any person, firm or corporation which to his knowledge is interested
directly or indirectly in any manner whatsoever in business dealings with the City;....

10. On May 3, 1994, the Madison Common Council adopted an ordinance
repealing
and recreating its Code of Ethics for all City elected officials, all City employes, and all
members
of City boards, committees and commissions, to be effective August 14, 1994, including Sec.
3.47(5)(a)1., MGO which provided that:

No incumbent may use or attempt to use her or his position or
office to obtain financial gain
or anything of value or any advantage, privilege or treatment for the private benefit of
herself or
himself ....

11. On June 15, 1994, City Attorney Eunice Gibson, responding to an inquiry
from
Library Director Peter Niemi, issued a memorandum to Niemi informing him that the Ethics
Code
both in its then present form, as well as the revised form that was to take effect August 14,
1994,
prohibited library staff members' receipt of discounts on personal book purchases from the
Library's suppliers.

12. On June 28, 1994, Niemi sent to all staff the following memorandum:

Regrettably (sic), the library must discontinue the practice of
providing for staff discounts on
books and other purchases from library suppliers, such as Baker and Taylor. The City
Attorney
has ruled that these discounts are in violation of the City Ethics Code.

There may be a possibility that staff could order and receive
discounts through South Central
Library System or the Dane County Library Service. Perhaps the Staff Association could
pursue
this.

Since Niemi's memorandum was issued, Library staff have no longer purchased books
and
materials at a discount from the jobbers through the Library.

13. The Summer 1994 edition of City News, the city employe
newsletter, contained
the following notice:

* Summer Deals -- Human Resources Department

There are a number of special deals and passes for many summer
activities available through
the Human Resources Department. Here is a sample:

* Disney Magic Kingdom Club

* Six Flags Great America

* 20% off Wisconsin Dells discount

* 20% off Noah's Ark

All you need to do is stop by the Human Resources Department
and pick up what you need
and you're on your way to some fun, and now less expensive, activities! Have a great
summer!

The record is silent on whether these promotional activities were available to non
City-employes
as well.

14. On July 14, 1994, Linda Wolfe, a member of the paraprofessional unit, and
Mary
Knapp, a librarian, filed grievances, alleging that Niemi's memo of June 28 violated Sections
16.02 and 17.03 of their respective collective bargaining agreements. The City did not offer
a
written response to either grievance.

15. On August 11, 1994, Bernfeld wrote to Lebowich as follows:

Local 60 hereby gives notice of its intent to proceed to arbitration
with the grievance
referenced pursuant to the Article VI - Grievance and Arbitration Procedure of the parties
(sic)
collective bargaining agreement. I will request the Commission to submit a panel of
arbitrators
from which the parties can select an arbitrator to hear and decide this dispute. Since this
grievance is identical to the one filed in the Librarian unit, we suggest that these matters be
consolidated for hearing. Please advise.

The Union remains willing to meet about this matter to attempt to
resolve same prior to a
hearing in the matter. If you are interested in meeting about same, please call.

16. On August 16, 1994, City Labor Relations Specialist Kenneth B. Wright wrote
to
Bernfeld as follows:

Please be advised that the City of Madison intends to rely on the
Wisconsin Employment
Relations Commission decision in Greenfield, Decision No. 14026-B, as is
announced at each of
our bargaining tables, which states that absent a contract the arbitrator has no power to
arbitrate.
We therefore decline to participate in your quest for arbitration. We do not intend to utilize,
absent a contract, Wisconsin Employment Relations Commission's panel or panels in this
(these)
matter(s).

17. On October 7, 1994, the Union filed complaints with the WERC, alleging that
the
City, by discontinuing the practice of providing for staff discounts on books and other
purchases
from library suppliers, has altered the statusquo and has refused to
bargain and has thereby
committed prohibited practices in violation of Sec. 111.70, Wisconsin Statutes, in particular,
subsections 3(a)1 and 4. As a remedy, the Union seeks an order declaring the City's action
to
have been a prohibited practice, directing the City to cease and desist from violating MERA,
ordering the City to bargain in good faith and restore the discount policy, directing the City
to
post notices regarding the order, and any other remedy the Commission believed appropriate.

18. Bernfeld's letter of July 26, 1993 to Lebowich, set forth above in Finding 8,
as well
as the grievances filed by the Complainants with regard to the City's decision to end the
practice
of permitting its Library employes to purchase books or materials for their personal use from
the
Library's suppliers at a discount only available to Library employes, constitutes demands by
the
Unions to bargain both the decision and the impact of the decision. The City has not
responded
to the Union's demands to bargain either the decision or the impact of the City's decision to
end
the practice.

19. The City's decision to interpret and apply its Code of Ethics so as to prohibit
the
continuance of the practice of permitting its Library employes to purchase books or materials
for
their personal use from Library suppliers at a discount only available to Library employes
primarily relates to the management and direction of the City's government and the
formulation
of public policy, rather than wages, hours and conditions of employment. The impact of the
City's decision to end the aforesaid practice primarily relates to the wages of the affected
employes.

Based on the foregoing Findings of Fact, the Examiner makes the following

CONCLUSIONS OF LAW

1. Sections 77.52 and 77.54, Stats., requires the payment of a sales tax upon the
retail
sale of tangible personal property or its consumption in this state. The purchase of books
and
materials from Library suppliers by employes for their personal use constitutes retail sales of
tangible personal property or the consumption of tangible personal property. The practice of
employes of Respondent City of Madison Library not being required to pay sales tax on their
purchase of books or materials for their personal use from the Library's suppliers violated
Wisconsin Statutes and is, therefore, an illegal subject of bargaining. Therefore, the
Respondent
City of Madison was not required to bargain the decision to end that practice.

2. The decision of the Respondent City of Madison to interpret and apply its
Code of
Ethics so as to prohibit, and thereby end, the practice of permitting Respondent's Library
employes to purchase books and materials for their personal use from the Library's suppliers
at
a discount only available to Library employes, constituted a permissive subject of bargaining
over
which the Respondent City of Madison was not required to bargain. Therefore, the
Respondent
City of Madison, its officers and agents, did not refuse to bargain in violation of Secs.
111.70(3)(a)1 or 4, Stats., by implementing its decision and unilaterally ending the practice
without bargaining with the Complainant, Dane County, Wisconsin Municipal Employees
Local
60, AFSCME, AFL-CIO, representing the employes in the bargaining units in Case 180 and
Case
181.

3. The impact of the decision of the Respondent City of Madison, as set forth in
Conclusion of Law 2, is a mandatory subject of bargaining over which the Respondent City
of
Madison is required to bargain with the Complainant, Dane County, Wisconsin Municipal
Employees Local 60, AFSCME, AFL-CIO, representing the employes in the bargaining units
in
Case 180 and Case 181. Therefore, by refusing to bargain the impact of said decision, the
Respondent City of Madison, its officers and agents, have refused to bargain in violation of
Secs.
111.70(3)(a)4, Stats., and derivatively, Sec. 111.70(3)(a)1, Stats.

On the bases of the foregoing Findings of Fact and Conclusions of Law, the
Examiner
makes the following

1. The allegations in Case 180 and Case 181 as to the violation of Secs.
111.70(3)(a)1
and 4, Stats. with regard to the Respondent City of Madison's unilateral decision to end the
practice set forth in Conclusion of Law 2, and thereby alter the statusquo, are dismissed.

2. The Respondent, City of Madison, its officers and agents shall immediately:

a. Cease and desist from refusing to bargain the impact of
its decision to end the practice set
forth in Conclusion of Law 2 with the Complainant Dane County, Wisconsin Municipal
Employees Local 60, AFSCME, AFL-CIO, with regard to the employes it represents in
the bargaining units in Case 180 and Case 181.

b. Take the following affirmative action which the
Examiner finds will effectuate the
purposes of the Municipal Employment Relations Act:

1. Notify Dane County, Wisconsin
Municipal Employees Local 60, AFSCME, AFL-CIO, in writing, that it will bargain the
impact of its decision to prohibit and end
the practice of permitting City of Madison Library employes to purchase books or
materials for their personal use from the Library's suppliers at a discount only
available to Library employes, as it relates to those employes in the bargaining
units in Case 180 and Case 181.

2. Notify all of the employes in the
bargaining units represented by Dane County,
Wisconsin Municipal Employees Local 60, AFSCME, AFL-CIO, in Case 180 and
Case 181 by posting in conspicuous places at its library facilities where notices to
such employes are usually posted, a copy of the Notice attached hereto as
"Appendix 'A'". The notice shall be signed by an authorized representative of the
City and shall remain posted for thirty (30) days thereafter. Reasonable steps shall
be taken by the City to ensure that said notices are not altered, defaced or covered
by other material.

3. Notify the Wisconsin Employment
Relations Commission within twenty (20) days
of the date of this Order, as to what steps have been taken to comply herewith.

Dated at Madison, Wisconsin, this 30th day of January, 1996.

WISCONSIN EMPLOYMENT RELATIONS COMMISSION

By David E. Shaw /s/

David E. Shaw, Examiner

Appendix "A"

NOTICE TO EMPLOYES

Pursuant to an order of the Wisconsin Employment Relations Commission, and in
order
to effectuate the policies of the Municipal Employment Relations Act, we hereby notify our
employes that:

1. We will not refuse to bargain the impact of the City's
decision to cease the practice of
permitting its Library employes to purchase books and materials for their personal use
from the Library's suppliers at a discount available only to Library employes.

2. We will notify Dane County, Wisconsin Municipal
Employees Local 60, AFSCME, AFL-CIO, in writing, that we will bargain the impact of the
City's decision referenced in
paragraph 1, above.

Dated at Madison, Wisconsin, this 30th day of January, 1996.

CITY OF MADISON

By

THIS NOTICE MUST BE POSTED FOR THIRTY (30) DAYS FROM THE DATE
HEREOF,
AND MUST NOT BE ALTERED, DEFACED OR COVERED BY ANY MATERIAL.

THE CITY OF
MADISON

MEMORANDUM ACCOMPANYING FINDINGS OF
FACT,

CONCLUSIONS OF LAW AND ORDER

POSITIONS OF THE PARTIES

In support of its complaints, the Union asserts that the unilateral cessation of the
discount
book benefit constitutes a refusal to bargaining as it alters the statusquo without negotiations. It
is a violation of Secs. 3(a)4 and derivatively and independently 3(a)1, Stats. The
statusquo is
preserved by the contract and the practices of the parties.

Given the language in each collective bargaining agreement preserving Existing
Benefits,
the threshold question is whether or not the book discount benefit constitutes a mandatory
subject
of bargaining. As the matter of book discounts is one that is primarily related to wages,
hours and
conditions of employment, and not a matter principally related to the formulation or
management
of public policy, this matter does relate to a mandatory subject of bargaining.

The City errs in asserting that the application of the Ethics Code is a matter of public
policy, in that the Code has coexisted with the discount book benefit (and with other
discounts
made available to City employes) for decades; an opinion by the City Attorney does not
change
that fact. It is not for the Commission to interpret and apply the City's Ethics Code, but
rather
only to apply the appropriate statutes and labor agreements. Further, even if a conflict exists
between the Code and the labor agreements, the labor agreements already establish that the
agreement supersedes any conflicting ordinance. That the labor agreements do not
specifically
address the issue of book discounts does not preserve for the City the unfettered right to
change
this condition of employment.

The book discount program is a longstanding practice which has become binding due
to
a provision in the labor agreements requiring the continuation of existing practices. The
unilateral
discontinuation of the book discount practice was an improper change in the
statusquo. The
Commission should order the City to cease and desist from such violations; order the City to
restore the statusquo and to bargain with the Union during
negotiations if it wishes to pursue the
matter; make employes whole; order the employer to post appropriate notices, and order any
other
remedy it believes appropriate.

In opposition to the complaints, the City asserts that the Union's assertion that the
City has
committed statutory violations is without merit, in that neither condition required to establish
something as an existing benefit -- that the benefit be authorized, and that it have been a
mandatory subject of bargaining -- was met.

That the discounts were not authorized is apparent from the fact that the users of the
discount did not pay sales tax on their purchases. Sec. 77.52, Stats., imposes the sales tax
on
sales of tangible personal property. The employes purchased the books and materials from
the
vendors, i.e., tangible personal property, for their private use. Thus, the purchases did not
qualify for the exemption as purchases made for the City. Any attempt to use the City's
exempt
status is illegal; any attempt by any person to authorize such a practice is beyond their lawful
authority. The discount and the lack of payment of the sales tax were not authorized because
they
were illegal.

Because the discount is not a mandatory subject of bargaining, it is further not subject
to
the narrowly drawn "existing benefits" clauses in the respective labor agreements. There
never
having been any previous discussion in bargaining relating to these discounts, and there never
having been a claim that the discounts were a mandatory subject of bargaining, and the
Union
having made no such claim at hearing, it is clear that even the units do not believe the
discount
is a mandatory subject of bargaining. Because the discount is not a mandatory subject of
bargaining, the discount is not subject to the labor agreements' "existing benefits" clauses by
the
parties' own clearly expressed provisions.

Further, absent anything in the agreements relating to materials discount or
application or
non-application of the Ethics Code, these units are subject to the Code. There being nothing
in
either labor agreement concerning these topics, and there being nothing in either agreement
which
conflicts with the Ethics Code, the City is authorized to apply the Code to members of these
units
through the respective management rights clauses.

Because the labor agreements clearly and unequivocally exclude from the existing
benefits
clauses those matters which are not mandatory subjects of bargaining, and the book discount
is
not a mandatory subject of bargaining, the Examiner should hold that elimination of the
discount
is required by the City Ethics Code and dismiss the complaints.

In reply, the Union responds that the City errs in asserting that the discounts were
not
authorized, when Library managers, who are city employes, authorized and participated in
the
program for decades. The City has produced no evidence that management lacked the
authority
to sanction the activity. The City further errs in raising the issue of sales tax, which is
irrelevant
to the determination of these complaints.

The City errs in asserting that the discount is not a mandatory subject of bargaining;
it is
not necessary for there to have been negotiations on this benefit to make it subject to the
provisions on existing benefits, the purpose of which is to ensure the continuation of other
rights
and conditions of employment not addressed by the parties. A prior claim that the benefit
was a
mandatory subject of bargaining was not required to establish it as such, especially when, as
a
practice that provides a clear benefit to employes without being primarily related to any
public
policy, it is by its very nature a mandatory subject of bargaining.

In reply, the City responds that in that it is the jobber, and not the City or Library,
which
grants the discount, and the Staff Association which administers it on behalf of represented
and
unrepresented employes, the units themselves are not involved in this dispute in any way; the
Commission should not interject itself in a non-unit issue which does not involve collective
bargaining agreements.

The Union has rather scrupulously avoided the issue of non-payment of state sales
tax,
expecting the Commission to authorize the continuation of tax evasion, something for which
there
is no legal authority. The Commission further lacks authority to permit continuation of the
discount predicated on payment of the tax, as such action would be beyond the bounds of
contract
interpretation and enforcement. The Commission should further avoid the minefield of state
revenue matters.

The fact that the Code was revised is irrelevant. The City Ethics Code and its
prohibition
of employes accepting such a private benefit as these discounts has existed for as long as this
benefit has been taken and always was, and remains, a clear assertion of public policy. The
practice was allowed only because no one outside the Library knew of it; once it was brought
to
the City's attention, it was stopped. The Commission may not interpret the Code and its
application, but must accept the City Attorney's interpretation.

The Union's belated contention that this benefit, granted by the jobber, is a
mandatory
subject of bargaining is in error. The matter was never raised in any contract negotiation.
The
professional unit's agreement provides a process for resolution of disputes over what
constitutes
a mandatory subject of bargaining, which process was never invoked. The Union's attempt
to
raise this issue at this late date is inappropriate and should by ignored, especially since a
benefit
which involves the non-payment of sales tax is excluded from the area of mandatory subjects.

Contrary to the Union's assertion, the discount and evasion of sales tax using the
City's
tax exempt status is precisely both a gratuity and an unintended benefit and a bad and
unreasonable
habit, self-granted at some time in the past by persons unknown and continued by those who
benefitted from it, and totally unrelated to any condition over which the City has any control.
The
granting of the benefit is not a condition of employment, and the Commission must dismiss
the
consolidated complaint.

DISCUSSION

It is initially noted that it was the City's decision to interpret and apply its Code of
Ethics,
both in the form it existed at the time of Niemi's June 28, 1994 memorandum and in its
revised
form, to prohibit Library employes from utilizing discounts from the Library's supplier,
which
thereby resulted in ceasing the practice of permitting the utilizing of such discounts and this
dispute.

The Union relies upon the "Existing Benefits" provisions in the expired agreements,
along
with the previously existing practice of allowing employes to purchase books and materials
through the Library's suppliers for their personal use at a discount, as establishing that
practice
as the statusquo to be maintained during the hiatus period after the
expiration of the agreements.
In its decision in School District of Wisconsin Rapids, Dec. No. 19084-C
(WERC, 3/85), the
Commission held:

It is well settled that, absent a valid defense, a unilateral
change
in the status quo wages,
hours or conditions of employment -- either during negotiations of a first agreement or
during a
hiatus after a previous agreement has expired -- is a per se violation of the
MERA duty to bargain.
Unilateral changes are tantamount to an outright refusal to bargain about a mandatory subject
of
bargaining because each of those actions undercuts the integrity of the collective bargaining
process in a manner inherently inconsistent with the statutory mandate to bargain in good
faith.
In addition an employer unilateral change evidences a disregard for the role and status of the
majority representative which disregard is inherently inconsistent with good faith bargaining.

(Citations omitted)

In explaining how it would determine what constituted the statusquo during a contract hiatus, the
Commission has held that it will consider the contract language, practice and/or bargaining
history. (2)

The duty to maintain the statusquo, as a function of the
duty to bargain in good faith as
to wages, hours and conditions of employment, applies only to mandatory subjects of
bargaining.
School District of Wisconsin Rapids, supra. Also, the "Existing Benefits"
clause in the expired
Agreement specifically applies only to "authorized existing employe benefits" and defines
"existing employe benefits" as "those that are mandatory subjects of bargaining primarily
related
to wages, hours and other conditions of employment".

In this case there is no real dispute as to the practice that existed until Library
Director
Niemi issued his Memorandum of June 28, 1994. The dispute is whether permitting Library
employes to purchase books and materials from the Library's suppliers at a discount for their
personal use, (3) and without paying the sales
tax, was an "authorized" existing employe benefit
and whether it is a mandatory subject of bargaining.

The City first argues that the practice was not authorized, since the employes did not
pay
sales tax on their purchases and it would be beyond anyone's lawful authority to authorize
the
employes to illegally utilize the City's tax exempt status. Further, since the practice is
illegal, it
is not a mandatory subject of bargaining.

As noted by the City, Sec. 77.52(1), Stats., imposes a sales tax on the gross receipts
from
the sale of tangible personal property. Sec. 77.52(3) and (4), Stats., provide:

(3) The taxes imposed by this
section
may be collected from the consumer or user.

(4) It is unlawful
for any retailer to advertise or hold out or state to the public or to any
customer, directly or indirectly, that the tax or any part thereof will be assumed or absorbed
by
the retailer or that it will not be added to the selling price of the property sold or that if
added it,
or any part thereof, will be refunded. Any person who violates this subsection is guilty of a
misdemeanor.

Section 77.53, Stats., imposes a use tax on the use or consumption of tangible personal
property
consumed in this state, to be paid by the person who "consumes" it, providing, in relevant
part:

77.53 Imposition of use tax. (1) An
excise tax is levied and imposed on the use or
consumption in this state of taxable services under s. 77.52 purchased from any retailer, at
the rate
of 5% of the sales price of those services; on the storage, use or other consumption in this
state
of tangible personal property purchased from any retailer, at the rate of 5% of the sales price
of
that property. . .

. . .

(2) Every person storing, using or
otherwise consuming in this state tangible personal
property or taxable services purchased from a retailer is liable for the tax imposed by this
section.

. . .

(7) The tax required to be collected
by
the retailer from the purchaser shall be
displayed separately from the list price, the price advertised in the premises, the marked
price,
or other price on the sales check, invoice or other proof of sale.

(8) Any person violating sub. (3) or
(7)
is guilty of a misdemeanor.

. . .

(10) For the purpose of the proper
administration of this section and to prevent evasion
of the use tax and the duty to collect the use tax, it is presumed that tangible personal
property or
taxable services sold by any person for delivery in this state is sold for storage, use or other
consumption in this state until the contrary is established. The burden of proving the
contrary is
upon the person who makes the sale unless that person takes from the purchaser a certificate
to
the effect that the property or taxable service is purchased for resale, or otherwise exempt
from
the tax.

. . .

It is apparent that the purchase of books and other materials from the supplier without
paying a
sales or use tax is illegal, albeit it is not clear whether it is the supplier or the employes who
are
at fault as the record does not indicate why the employes had not been charged the tax on
their
purchases. There is no evidence that any of the employes have claimed or attempted to
utilize the
City's tax exempt status. (4) Nevertheless, the
circumstance of sales tax or use tax not being paid
on the purchase of tangible, personal property meant for the employes' personal use violates
state
statutes. Thus, to the extent the nonpayment of sales tax was part of the practice that had
been
permitted, that aspect constitutes an illegal subject of bargaining over which the City had no
obligation to bargain or to maintain as part of the statusquo.

The City essentially asserts that the nonpayment of sales tax is part of the benefit the
Union
is claiming existed and that it is beyond the Commission's authority to permit continuation of
the
discounts conditioned upon payment of the sales tax. Whether the practice may be
considered in
its several aspects, with the aspects considered separately and independently, or whether the
practice must be considered in all of its aspects as a whole, depends on how and if those
aspects
are interrelated. In this instance, the discount offered by the suppliers is easily separable
from the
supplier's failure to charge the employes sales or use tax on their purchases and one aspect is
not
dependent upon the other. It appears instead that the failure to charge the employes sales tax
on
their purchases was more an inadvertent than an intentional, albeit improper, "benefit" the
supplier
was providing. Further, the evidence indicates that it was the supplier's discount to the
employes
based upon their status as Library employes that has been the primary concern of both
parties.

The City also asserts that the practice was not "authorized", since the City's Code of
Ethics
has prohibited the taking of such a private benefit for as long as the practice has existed, and
in
fact the Code was even more precise in that regard prior to its being revised. Assuming the
City
is properly interpreting its Code of Ethics, the problem with the City's argument lies in the
parties' Agreements. Section 1.04, Conflicting Ordinances and Resolutions, provides that the
terms and conditions of each Agreement shall be adopted by resolution and ordinance and
shall
supersede ordinances where there is a conflict with the terms of the Agreements. Section
1.04
assumes there may be conflicts between the terms of the Agreements and other City
ordinances
and provides that the former shall supersede the latter. The "Existing Benefits" provision in
the
Agreement is obviously a term of those Agreements. Thus, the fact that the Code of Ethics
has
now been interpreted to prohibit such a benefit as is the subject of these cases, does not of
necessity result in a finding that the benefit/practice has not been "authorized" within the
meaning
of Secs. 16.02 and 17.03. It is clear from the record that the management personnel at the
Library have been aware of the practice of permitting Library employes to utilize supplier
discounts and utilized the discounts themselves. Thus, there was tacit approval of the
practice to
the degree the employes and the Union could reasonably assume it was "authorized".

It is therefore necessary to determine whether the decision to end the practice of
permitting
Library employes to purchase books/materials from suppliers at a discount available only to
Library employes constitutes a mandatory subject of bargaining. (5) Section 111.70(1)(a), Stats.,
is the starting point for such a determination and provides as follows:

111.70 Municipal Employment. (1)
DEFINITIONS. As used in this subchapter:

(a) "Collective bargaining" means the
performance of the mutual obligation of a
municipal employer, through its officers and agents, and the representatives of its municipal
employes in a collective bargaining unit, to meet and confer at reasonable times, in good
faith,
with the intent of reaching an agreement, or to resolve questions arising under such an
agreement,
with respect to wages, hours and conditions of employment, and with respect to a
requirement of
the municipal employer for a municipal employe to perform law enforcement and fire
fighting
services under s. 61.66, except as provided in sub. (4)(m) and s. 40.81(3) and except that a
municipal employer shall not meet and confer with respect to any proposal to diminish or
abridge
the rights guaranteed to municipal employes under ch. 164. The duty to bargain, however,
does
not compel either party to agree to a proposal or require the making of a concession.
Collective
bargaining includes the reduction of any agreement reached to a written and signed
document.
The municipal employer shall not be required to bargain on the subjects reserved to
management
and direction of the governmental unit except insofar as the manner of exercise of such
functions
affects the wages, hours and conditions of employment of the municipal employes in a
collective
bargaining unit. In creating this subchapter the legislature recognizes that the municipal
employer
must exercise its powers and responsibilities to act for the government and good order of the
jurisdiction which it serves, its commercial benefit and the health, safety and welfare of the
public
to assure orderly operations and functions within its jurisdiction, subject to those rights
secured
to municipal employes by the constitutions of this state and of the United States and by this
subchapter.

In its decision in West Bend Education Association v. WERC, 121 Wis.
2d 1 (1984), the
Wisconsin Supreme Court held that Sec. 111.70(1)(a), Stats., (then Sec. 111.70(1)(d)) is to
be
interpreted and applied as follows in determining whether a subject of bargaining is
mandatory
or permissive:

Sec. 111.70(1)(d) sets forth the legislative delineation between
mandatory and
nonmandatory subjects of bargaining. It requires municipal employers, a term defined as
including school districts, sec. 111.70(1)(a), to bargain "with respect to wages, hours and
conditions of employment." At the same time it provides that a municipal employer "shall
not
be required to bargain on subjects reserved to management and direction of the governmental
unit
except insofar as the manner of exercise of such functions affects the wages, hours and
conditions
of employment of the employees." Furthermore, sec. 111.70(1)(d) recognizes the municipal
employer's duty to act for the government, good order and commercial benefit of the
municipality
and for the health, safety and welfare of the public, subject to the constitutional and statutory
rights of the public employees.

Sec. 111.70(1)(d) thus recognizes that the municipal employer
has a dual role. It is both
an employer in charge of personnel and operations and a governmental unit, which is a
political
entity responsible for determining public policy and implementing the will of the people.
Since
the integrity of managerial decision making and of the political process requires that certain
issues
not be mandatory subjects of collective bargaining, Unified School District No. 1 of Racine
County
v. WERC, 81 Wis. 2d 89, 259 N.W.2d 724 (1977), sec. 111.70(1)(d) provides an
accommodation
between the bargaining rights of public employees and the rights of the public through its
elected
representatives.

In recognizing the interests of the employees and the interests
of
the municipal employer
as manager and political entity, the statute necessarily presents certain tensions and
difficulties in
its application. Such tensions arise principally when a proposal touches simultaneously upon
wages, hours, and conditions of employment and upon managerial decision making or public
policy. To resolve these conflict situations, this court has interpreted sec. 111.70(1)(d) as
setting
forth a "primarily related" standard. Applied to the case at bar, the standard requires WERC
in
the first instance (and a court on review thereafter) to determine whether the proposals are
"primarily related" to "wages, hours and conditions of employment," to "educational policy
and
school management and operation," to "'management and direction' of the school system" or
to
"formulation or management of public policy." Unified School District No. 1 of Racine
County
v. WERC, 81 Wis. 2d 89, 95-96, 102, 259 N.W.2d 724 (1977). This court has construed
"primarily" to mean "fundamentally," "basically," or "essentially," Beloit Education Assn. v.
WERC, 73 Wis. 2d 43, 54, 242 N.W.2d 231 (1976).

As applied on a case-by-case basis, this primarily related
standard is a balancing test which
recognizes that the municipal employer, the employees, and the public have significant
interests
at stake and that their competing interests should be weighed to determine whether a
proposed
subject for bargaining should be characterized as mandatory. If the employees' legitimate
interest
in wages, hours, and conditions of employment outweighs the employer's concerns about the
restriction on managerial prerogatives or public policy, the proposal is a mandatory subject
of
bargaining. In contrast, where the management and direction of the school system or the
formulation of public policy predominates, the matter is not a mandatory subject of
bargaining.
In such cases, the professional association may be heard at the bargaining table if the parties
agree
to bargain or may be heard along with other concerned groups and individuals in the public
forum.
Unified School District No. 1 of Racine County v. WERC, supra, 81 Wis. 2d at 102; Beloit
Education Asso., supra, 73 Wis. 2d at 50-51. Stating the balancing test, as we have just
done,
is easier than isolating the applicable competing interests in a specific situation and evaluating
them.

(Footnotes omitted)

At pages 7-9.

In its decision in Unified School District No. 1 of Racine County v.
WERC, supra, the
Wisconsin Supreme Court held:

"The question is whether a particular decision is primarily related
to the wages, hours and
conditions of employment of the employees, or whether it is primarily related to the
formulation
or management of public policy. Where the governmental or policy dimensions of a decision
predominate, the matter is properly reserved to decision by the representatives of the people.
This
test can only be applied on a case-by-case basis, and is not susceptible to "broad and
sweeping
rules that are to apply across the board to all situations. . ."

At 81 Wis. 2d 102.

Therefore, in this case it must be determined whether the City's prohibition on the
acceptance of such a discount, through its application of the Code of Ethics, primarily relates
to
wages, hours and conditions of employment or to the management and direction of the City
or
formulation or management of public policy. In doing so, the interests of the employes in
maintaining the economic benefit of being able to utilize the discounts provided by the
suppliers
must be balanced against the City's interests in maintaining the public's trust in the City
government and avoiding possible conflicts of interest among its employes. In this case, it is
actually the Library's suppliers that provide the economic benefit and the involvement of the
City
has been to permit the employes to take advantage of the discounts and to place the orders
and
pick them up at the Library. The discounts vary in amount from five percent to forty-three
percent and the value of the economic benefit to an employe varies based on if and how often
the
employe uses it, the price of the book/materials and the amount of the discount. With the
exception of the Christmas season, the number of orders per month generally is at least ten.
Thus,
the degree of the economic impact of prohibiting the employes from utilizing the discount
varies
from employe to employe and from order to order. Conversely, the City has a substantial
interest
in protecting its integrity and maintaining the public's trust in City government. The City
asserts
that the discounts violate its Code of Ethics because they are only available to Library
employes.
The Union points out that the City apparently has no problem with its employes receiving
other
discounts, such as those for the Disney Magic Kingdom Club, Six Flags Great America,
Wisconsin Dells and Noah's Ark, it made available to its employes through the City's
Human
Resources Department. The Union's point would be well taken if it were shown that those
discounts were made available from those organizations only to City employes, as opposed to
members of the general public. The record, however, is silent on whether such discounts are
generally available to the public or restricted to City employes. There is also no evidence
that
those organizations were doing business with the City or interested in doing so. Therefore,
the
Examiner does not find the discounts from the Library's suppliers, restricted as it is to the
Library's employes, analogous to those discounts or deals available from the Disney Club,
Six
Flags, etc., noted above.

In School District of Drummond, Dec. No. 17251-B (WERC, 6/82)
aff'd, 121 Wis. 2d
126 (1984), the Commission held that an anti-nepotism policy was a mandatory subject of
bargaining. The school board adopted and implemented an anti-nepotism policy prohibiting
the
employment of spouses of school board members for reasons that appear to be similar in
some
respects to those presumably underlying the City's application of its Code of Ethics to
prohibit
employes from utilizing discounts from its suppliers. Unlike the case in
Drummond, however,
the City's prohibiting its Library employes, represented and unrepresented alike, from
utilizing
the discounts from the Library's suppliers does not have the "heavy, direct and immediate
primary
relationship" to the employe's wages, such as the anti-nepotism policy had to employe terms
and
conditions of employment, i.e., termination of employment.

In this case, in weighing the employes' interest in being permitted to take advantage
of an
economic benefit offered by a third party -- the Library's suppliers -- against the City's
interest
in maintaining the public's trust and avoiding conflicts of interest, it is concluded that the
prohibition imposed by the City through the application of its Code of Ethics is primarily
related
to the management and direction of the City government in furtherance of its responsibility
"to
act for the government and good order of the jurisdiction which it serves, its commercial
benefit
and the. . .welfare of the public to assure orderly operations and functions within its
jurisdiction,
. . ." That being the case, the City was not obligated to first bargain the decision to apply
its
Code of Ethics so as to prohibit the practice of permitting Library employes to take
advantage of
the discounts the Library's suppliers offered to only the Library employes, before
implementing
its decision. (6) Thus, in that regard, the City
did not refuse to bargain within the meaning of Sec.
111.70(3)(a)4, Stats. However, the impact of the City's decision to cease the practice of
permitting the Library employes to utilize the supplier discounts primarily impacts on
"wages",
and is a mandatory subject of bargaining over which the City was, and is, required to
bargain.
The City's refusal to bargain the impact of its decision to end the practice has, therefore,
been
found to be in violation of Sec. 111.70(3)(a)4, Stats., and derivatively, Sec. 111.70(3)(a)1,
Stats.,
and the City has been ordered to fulfill its obligation in that regard.

Dated at Madison, Wisconsin, this 30th day of January, 1996.

WISCONSIN EMPLOYMENT RELATIONS COMMISSION

By David E. Shaw /s/

David E. Shaw, Examiner

1. Any party may file a petition for review with the
Commission by following the procedures
set forth in Sec. 111.07(5), Stats.

Section 111.07(5), Stats.

(5) The commission may authorize a commissioner or
examiner to make findings and
orders. Any party in interest who is dissatisfied with the findings or order of a
commissioner or
examiner may file a written petition with the commission as a body to review the findings or
order. If no petition is filed within 20 days from the date that a copy of the findings or
order of
the commissioner or examiner was mailed to the last known address of the parties in interest,
such
findings or order shall be considered the findings or order of the commission as a body
unless set
aside, reversed or modified by such commissioner or examiner within such time. If the
findings
or order are set aside by the commissioner or examiner the status shall be the same as prior
to the
findings or order set aside. If the findings or order are reversed or modified by the
commissioner
or examiner the time for filing petition with the commission shall run from the time that
notice
of such reversal or modification is mailed to the last known address of the parties in interest.
Within 45 days after the filing of such petition with the commission, the commission shall
either affirm, reverse, set aside
or modify such findings or order, in whole or in part, or direct the taking of additional
testimony.
Such action shall be based on a review of the evidence submitted. If the commission is
satisfied
that a party in interest has been prejudiced because of exceptional delay in the receipt of a
copy
of any findings or order it may extend the time another 20 days for filing a petition with the
commission.

This decision was placed in the mail on the date of issuance (i.e. the
date
appearing immediately above the Examiner's signature).

3. While it is the supplier that offers the discount,
not the City, the practice has been that the
City has permitted the Library employes to utilize those discounts. It is that permission
which has been withdrawn by the City's decision to apply its Code of Ethics so as to
prohibit employes from utilizing such discounts.

4. The record indicates that the employe orders were
made separately from Library orders,
shipped separately, and paid for separately, however, the invoices also indicate the orders
were for the Madison Public Library to the "SCLS Acct".

5. The Examiner finds no merit to the City's
contention that the Union should be precluded
from now asserting that the practice involving the suppliers' discount is a mandatory
subject of bargaining, since the Union had never made that claim previously in
negotiations and had not previously sought a determination of the practice's status from
the Commission as provided in Sec. 17.03 of the professionals unit Agreement. As the
Union notes, there was not a dispute regarding the practice until Niemi's memorandum of
June 28, 1994 was issued discontinuing the practice. The status of the practice not having
been previously questioned, there was no reason for the Union to have made such a claim
or to have sought a determination prior to Niemi's memorandum.